Fiserv: Electronic Billing and Payment Company Case Study

Introduction

Fiserv an Electronic Billing and Payment Company is faced with a challenge to come up with recommendations to present to its e-billing partners regarding how to increase e-billing adoption among its customers. Fiserv has hired a market research team to study and segment the market for e-billing. Fiserv has to analyze the market research findings by using segmentation strategy and customer value segmentation, to develop a message that would help the billers move their consumers from exclusive paper billing to exclusive e-billing.

Segmentation Scheme

Fiserv is looking to make strides in the electronic billing or “e-billing” market and based on their research they have segmented the groups they could possibly target to adapt e-billing into 6 distinct groups:

E-Savvy Planners – People who already prefer e-bills to paper bills

Maximizers – People who don’t have a preference, but value easy of use and easy access to information and are comfortable with the new tech.

Self Improvers – People who could use a better system for their bills, but have minor internet security concerns.

Convenience Seekers – People who like to have the paper bill for their records and have a good management system for their bills.

Desperate Avoiders – Don’t use electronic bill pay, don’t have a good management systems, but are also unwilling to pay for a better system

Paranoid Paper Pushers – Believe new technology is a waste of time

Based on the lecture videos about segmentation, this is a strong enough segmentation scheme to market against because these segments are clearly defined by their attitudes toward e-billing  and their profit potential.  What’s more, these segments have clearly defined needs that allow Fiserv to specifically market to each specified group with unique messaging.  Although the demographics of each segment may not vastly differ, the behaviors and attitudes of the segments are clearly different: Fiserv has the opportunity to pick a segment based on their profit potential.

With each segment having different behaviors, we believe that we will be able to play on those motivations by developing a clear positioning message that will specifically target customers in their respective segments.  We will use that ability to pick the most profitable segment and target specifically to them.  Since the behaviors and attitudes of each group are so different, a mass marketing scheme would not work because it would not capture the interest of any particular group.  All of the groups would perhaps see the message, but would feel that the message was not definitively for them.  If we instead target a specific segment, we would be able to cater to the needs of that one group and grow our e-billing customer base.  We would be able to target specifically to the group we choose by picking a media that suits their behaviors, whereas with a mass market approach we would have to use multiple medias that would likely fall short of piquing interest of potential customers.

Value and Targeting Priorities

We have selected three key criterions on which to choose our target market; the potential interest they would have in our product, the potential cost to convert them to e-billing and the potential profit they represent to Fiserv.

Potential Interest:  Even if they are possible high profit customers, if we have no chance of converting them it is pointless to waste our time and money chasing after them.   We will base their potential interest on how likely their current attitudes are to fit with e-billing. For example, if they believe that new technology is a waste of time then that segment, conversely, is probably a waste of time for us.

Cost to Convert: If the cost to convert them offsets the potential profit they could bring in, then they would not be a valuable segment to go after.   We have based the cost to convert on the combination of factors such as conversion rate, conversion cost and potential savings.

Potential Profit: all else being equal, we want to focus on the group that will add the most value to our company.  We have based potential profit on a combination of how much money the segment makes, the size of the segment and potential for future earnings.

The table above suggests that, E-savvy planners and Maximizers provide high overall attractiveness. Therefore, we focused more on these two segments while doing calculations for marketing analysis.

We have analyzed the total saving that could be achieved by implementing the below four distinct marketing strategies:

1. Mass Marketing, ignore market segment differences and appeal the whole market with one message.
2. Target E-Savvy, single message tailored to E-Savvy Planners that could produce a halo effect into the segments closer to it.
3. Target Maximizers, single message tailored to Maximizers that could produce a halo effect into the segments closer to it.
4. Target E-Savvy and Maximizers, single message that is developed to influence both these segments, as they are the most attractive.

Assumptions for Marketing Strategies:

1. Consumer receives, on average 12 bills from a biller
2. Direct conversion:

1. Year one – Annual mail savings if paper turnoff is $6.75
2. Year two – Annual mail savings if paper cancelled is $6.75
3. Net savings after year one is $0.45
4. Net savings after year two is $4.95
5. Total savings, after two years is $5.40

1. Direct conversion:

1. Year one – Annual Fiserv savings if paper not turnoff is $0.30
2. Year two – Annual mail savings if paper cancelled is $6.75
3. Net savings after year one is $0.70
4. Net savings after year two is $3.45
5. Total savings, after two years is $4.15

The table above shows the direct/Indirect conversion rates and total savings for each marketing strategy. Targeting Maximizers, highlighted, provides the most conversion rates and highest total savings of about 23.3 million dollars.